China’s Central Bank Builds A Blockchain System As A Substitute For Paper Checks

China’s central bank the People’s Bank of China (PBoC) has just unveiled their new blockchain-based system that digitises checks issued by domestic firms, local news media Financial News reported on 5 June.

Digital head of the bank’s digital currency research laboratory department Di Gang declared that they have finished the blockchain-based infrastructure that issues digital checks and business operations will be administered by smart contracts.

With the new implementation, the officials hope this change will increase transparency and discourage checking frauds.

The new system comes after an entire year of research and development process that commenced in 2016 when the lab first unveiled plans to adopt blockchain technology to alleviate fraud cases in the Chinese market. In January 2017, they successfully performed a laboratory trial with a prototype.

According to Di, physical checks are like money orders where they can be used to make payment claims from a bank. However, they also allow payees to exchange them with other entities.

The developers claimed that the new technology’s consensus algorithm allows “short transaction times” of approximately three seconds, preventing people from meddling with the transactions once they are completed.

Di went on to explain,

“Once the smart contract rules are set in the blockchain, any participant cannot alter the system easily. Even for code updates, regulators will have full access to the record, which increases regulatory efficiency and reduces the cost by removing a manual cross-checking process for transactions.”

While the local government regulators has been coming down hard on cryptocurrencies and Initial Coin Offerings (ICOs) by banning them, they showed a more optimistic view of blockchain technology. Last year, China managed to file the world’s most number of blockchain technology patents with the World Intellectual Property Organisation (WIPO).